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MIDTERM EXAMINATION
GOVERNMENT ACCOUNTING AND NON-PROFIT ORGANIZATION
1ST SEMESTER
AY 2020-2021
1. What is the legal basis of the COA in promulgating the GAM for NGAs?
a. Revised Penal Code, Art. 217
b. State Audit Code of the Philippines, P.D. No. 1445, Sec. 109
d. R.A. 9298
2. The GAM for NGAs aims to update all of the following except
a. standards, policies, guidelines and procedures in accounting for government funds and
property
b. coding structure and accounts
c. accounting books, registries, records, forms, reports and financial statements
3. Which of the following is one of the Fundamental Principles for Revenue under the GAM for
NGAs?
b. Temporary receipts may be issued to acknowledge the receipt of public funds; provided
that, an official receipt is issued within a short period of time as may be prescribed by
the COA.
c. Money in the hands of the Collecting Officer may be utilized for the purpose of cashing
private checks, upon proper endorsement and identification of the payee or endorsee.
Checks drawn in favor of the government in payment of any such indebtedness shall
likewise be accepted by the officer concerned.
d. All of these
4. Which of the following is not one of the Fundamental Principles for Disbursement of Public
Funds under the GAM for NGAs?
a. No money shall be paid out of any public treasury or depository except in pursuance of
an appropriation law or other specific statutory authority.
b. Government funds or property shall be spent or used solely for public purposes.
c. Trust funds shall be available and may be spent only for the specific purpose for which
the trust was created or the funds received.
5. Which of the following statements is incorrect regarding the GAM for NGAs?
a. The COA shall keep the general accounts of the Government and, for such period as
may be provided by law, preserve the vouchers and other supporting papers pertaining
thereto, pursuant to Section 2, par. (1), Article IX-D of the 1987 Philippine Constitution.
b. The financial reporting system of the Philippine government consists of accounting
system on accrual basis and budget reporting system on budget basis under the
statutory responsibility of the NGAs, Bureau of the Treasury (BTr), Department of
Budget and Management (DBM), and the COA.
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c. The objectives of general purpose financial statements (GPFSs) are to provide
information about the financial position, financial performance, and cash flows of an
entity that is useful to a wide range of users in making and evaluating decisions about
the allocation of resources. Specifically, the objectives of general purpose financial
reporting in the public sector are to provide information useful for decision-making, and
to demonstrate the accountability of the entity for the resources entrusted to it.
6. Entity A, a government entity, has an unused NCA of ₱50,000 at the end of the current
year. The entry to record the reversion of unused NCA is
b.
c.
d.
50,000
Accumulated Surplus/(Deficit)
Cash-Treasury/Agency Deposit,
Regular
Subsidy from National Government
Cash-Collecting Officers
No journal entry.
50,000
50,000
50,000
7. Which of the following is not one of the registries maintained by a government entity?
b.
c.
d.
e.
Registry of Appropriations and Allotments
Registries of Allotments, Obligations and Disbursements
Registries of Budget, Utilization and Disbursements
All of these are maintained by a government entity
8. This accounting concept is necessary so that users can use information in the financial
statements in noting differences and similarities between those information presented and
information from other sources that the user may have.
a. Financial statement analysis and ratios
b. Understandability
d. Feedback value or confirmatory value
9. Which of the following statements is correct regarding the Fundamental Principles for
Disbursement of Public Funds under P.D. No. 1445?
a. No money shall be paid out of any public treasury or depository except through the
issuance of Modified Disbursement System Checks.
b. Generally accepted principles and practices of accounting as well as of sound
management and fiscal administration shall be observed and shall be presumed to have
higher authority in cases where these principles conflict with the law.
d. All disbursements or dispositions of government funds or property shall invariably bear
the approval of the COA.
10. During the period, Entity A, a government entity, withheld ₱100,000 taxes from its
payments to employees and suppliers. On September 14 of the current year, Entity A
remitted the taxes withheld to the BIR through Tax Remittance Advice. The entry to record
the remittance includes
a.
Cash-Tax Remittance Advice
100,000
Due to BIR
100,000
b.
Subsidy from National Government
100,000
Cash-Tax Remittance Advice
100,000
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c.
a and b
11. Which of the following principles is not in accordance with the Basic Government
Accounting and Budget Reporting Principles under the GAM for NGAs?
b. budget basis for presentation of budget information in the financial statements (FSs) in
accordance with PPSAS 24
c. RCA prescribed by COA
d. financial statements based on both accounting and budgetary records
e. fund cluster accounting
12. The “Cash – Treasury/Agency Deposit, Regular” account is used in which of the following
transactions?
a. Collections from customers are made through direct deposit in the entity’s account
maintained with a Government Servicing Bank (GSB).
b. Taxes withheld are remitted to the BIR.
c. A disbursement authority in the form of Cash Disbursement Ceiling is received.
13. The NGAs are responsible for
a. promulgating accounting and auditing rules and regulations.
b. implementing the national budget with the goal of attaining the nation’s socio-economic
objectives.
c. receiving and keeping national funds and managing and controlling the disbursements
thereof.
14. The receipt of a disbursement authority in the form of Non-Cash Availment Authority
(NCAA) is debited to which of the following accounts?
a. Cash-Constructive Income Remittance
b. Cash-Modified Disbursement System (MDS), Regular
d. Subsidy from National Government
15. Which of the following events or transactions requires recording in the books of accounts of
a government entity?
a. Appropriation
b. Allotment
d. Incurrence of Obligation
e. None of these
16. No journal entry is made for the receipt of this type of disbursement authority.
a. NCA
b. NCAA
c. CDC
17. The basis of accounting required by the GAM for NGAs is
a. Budget basis
b. Modified accrual basis
c. Cash basis
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18. The President’s explanation of the country’s fiscal policy and budget priorities is contained
in a document called the
a. National Expenditure Program
c. President’s Fiscal Policy and Priorities
d. Budget of Expenditures and Sources of Financing
19. After the incurrence of obligations, the next step in the budget cycle is
a. Allotment
b. Disbursement
c. Appropriation
20. It is the expenditure authority derived from appropriation laws, government ordinances,
and other decisions related to the anticipated revenue or receipts for the budgetary period.
a. Notice of Cash Allocation
b. Allotment
d. General Appropriations Bill
21. After the budget call, budget hearings are made whereby agencies defend their proposed
programs and expenditures for the upcoming year before the
a. COA
c. Congress
d. BTr
22. Under responsibility accounting, a cost is considered controllable at a given level of
managerial responsibility if
b. the cost is non-recurring, can be measured with sufficient reliability and is not
immaterial
c. the cost is a fixed cost, such that its incurrence is reasonably certain.
d. all of these.
23. No journal entry is made for a disbursement under this mode of disbursement.
a. LDDAP-ADA
b. CPC
c. eMDS
24. Entity A, a government entity, had the following transactions during the period:
 Received Notice of Cash Allocation (NCA) amounting to ₱430,000.
 Earned total revenue of ₱40,000 from billings and collections of unbilled income.
 Incurred total expenses of ₱240,000.
 Remitted total taxes withheld of ₱37,000 to the BIR through Tax Remittance Advice
(TRA).
 The “Cash-Modified Disbursement System (MDS), Regular” has an unused balance of
₱52,000 at the end of the period.
How much is the surplus (deficit) for the period?
a. 230,000
c. (200,000)
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d. 178,000
25. The entry to record the granting of cash advance for payroll fund is
xxx
a.
Salaries and Wages, Regular
xxx
Personal Economic Relief Allowance (PERA)
Due to BIR
Due to GSIS
Due to Pag-IBIG
Due to PhilHealth
Due to Officers and Employees
c.
d.
Due to Officers and Employees
Advances for Payroll
Cash-Collecting Officers
Advances for Payroll
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
26. Which of the following transactions is not recorded through a credit to the “Cash-Modified
Disbursement System (MDS), Regular” account?
a. Reversion of unused NCA at the end of the period.
b. Payment of accounts payable wherein the tax portion is withheld.
c. Granting of cash advance for payroll.
27. Which of the following statements best differentiates the government accounting process
from the accounting process of a business entity?
a. The government accounting process involves numerous complicated steps or
procedures that are beyond the understanding of a mere JPIA member, but not for a
CPA.
b. The government accounting process involves procedures that are not generally
acceptable for business entities.
d. Unlike for the accounting process of business entities which ends in the preparation of
general purpose financial statements, the government accounting process ends with the
audit by the COA.
28. This report, required of government entities, shows the names of creditors, the amounts
owed to them, and the number of days these obligations are outstanding. This report is
submitted to the COA and DBM within 30 days after the end of the year.
a. List of Not Yet Due and Demandable Obligations
c. Percentage of Obligations Report
d. Report on Allotments, Obligations and Disbursements
29. Under this approach to budgeting, several parties participate in the budget preparation,
starting from the lowest levels of the government up to the highest levels.
a. Bottoms-up budgeting
b. Zero-based budgeting
c. Incremental budgeting
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30. A government entity recognizes revenue from exchange or non-exchange transactions. In
which of the following transactions does a government entity need not recognize revenue?
a. Exchange of goods or services of dissimilar nature and value.
b. Receipt of an unconditional grant from a foreign government.
c. Receipt of equipment as donation from a good-hearted, private individual.
31. A government entity remitting collections to the BTr will debit this account to record the
remittance.
b. Cash – Collecting Officers
c. Cash-Modified Disbursement System (MDS), Regular
d. Subsidy from National Government
32. According to P.D. 1445, government entities shall acknowledge receipts of revenue
a. through temporary receipts; provided a prior approval by COA is obtained.
b. through the issuance of properly endorsed checks.
c. through duplicate copies which shall not be the exact copies of the original.
33. It refers to a fund which is available for any purpose other than those which other funds
have been designated to
b. Major fund
c. Regular fund
d. All-purpose fund
34. These refer to transactions in which one entity receives assets or services, or has liabilities
extinguished, and directly gives approximately equal value to another entity in exchange.
b. Non-exchange transactions
c. Non-reciprocal transactions
d. External events other than transfers
35. This refers to charges for the use of cash or cash equivalents, or amounts due to the entity.
a. Financial expenses
b. Personnel services
d. Capital outlays
36. A government entity records a transaction by debiting an account with a Revised Chart of
Account (RCA) Code that starts with “1” and crediting an account with an RCA Code that
starts with “4.” This transaction is most likely a
a. constructive remittance of taxes withheld to the BIR through TRA.
c. payment of accounts payable.
d. receipt of inter-agency fund transfer.
37. Which of the following government agencies will most likely be able to obtain a
disbursement authority in the form of Cash Disbursement Ceiling (CDC)?
a. DA
b. NIA
d. DENR
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38. Entity A, a government entity, bills ₱200,000 for Communications Network Fees. Which of
the following is the correct entry for the billing?
a.
Cash-Collecting Officers
200,000
Communications Network Fees
200,000
b.
Cash-Modified Disbursement System (MDS), Regular
200,000
Communications Network Fees
200,000
c.
Accounts receivable
200,000
Subsidy from National Government
200,000
39. A government entity will report surplus in its statement of financial performance in which
of the following instances?
b. The total debits in the statement of financial performance columns in the worksheet
exceed the total credits.
c. The total debits in the statement of financial position columns in the worksheet exceed
the total credits.
d. All of these.
40. The best estimate for a loss is ₱100,000. However, the entity deliberately overstated the loss
to ₱120,000. Which of the following qualitative characteristics is violated?
a. Prudence
b. Reliability
d. Nothing is violated
41. During the period, Entity A, a government entity approved a ₱400,000 payroll and granted
the Disbursing Officer a cash advance of ₱280,000, net of withholding taxes and
contributions to GSIS, PhilHealth and Pag-IBIG. The pro-forma entry to record the
liquidation of the payroll fund is
xxx
a.
Salaries and Wages, Regular
xxx
Personal Economic Relief Allowance (PERA)
xxx
Due to BIR
xxx
Due to GSIS
xxx
Due to Pag-IBIG
xxx
Due to PhilHealth
xxx
Due to Officers and Employees
xxx
b.
Advances for Payroll
Cash-Modified Disbursement
System (MDS), Regular
xxx
d.
Cash-Collecting Officers
Advances for Payroll
xxx
xxx
42. Which of the following modes of disbursements would result to the recognition of a loan
payable in books of the BTr?
b. CDC
c. ADA
d. AWAN
43. The receipt of an inter-agency fund transfer is recorded as
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a.
b.
d.
Cash-Collecting Officers
Subsidy from National Government
Cash-Modified Disbursement System (MDS), Regular
Due to (Central Office, Regional Office,
Operating Units or Other Funds)
xxx
Cash-Modified Disbursement System (MDS), Regular
Accumulated Surplus (Deficit)
xxx
xxx
xxx
xxx
xxx
44. Arrange the following accounts in the sequence they appear in the trial balance.
I.
II.
III.
IV.
V.
Permit Fees
Allowance for Impairment-Accounts Receivable
Due to BIR
Salaries and Wages-Regular
Advances for Payroll
b. II, III, V, I and IV
c. V, II, III, I and IV
d. II, V, I, III and IV
45. The entry to close the “Cash-Treasury/Agency Deposit, Regular” account at the end of the
period is
b.
c.
d.
Subsidy from National Government
Cash-Treasury/Agency Deposit,
Regular
Cash-Collecting Officers
Cash-Treasury/Agency Deposit,
Regular
None of these. The account is not closed.
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xxx
xxx
xxx
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46. This account is debited when government entities remit collections to the National
Treasury.
a. Cash-Modified Disbursement System (MDS), Regular
b. Cash-Collecting Officers
d. Cash-Tax Remittance Advice
47. All of the above involves the physical transfer of cash except
b. Remittance of collections of revenue to the National Treasury
c. Remittance of employee contributions to GSIS, Pag-IBIG and PhilHealth
d. Remittance of excess cash advance by an officer
48. Entity A, a government entity, has withheld a total of ₱800,000 from the salary payments to
its employees representing contributions to the GSIS, Pag-IBIG and PhilHealth. The proforma entry to record the remittance of the contributions to the GSIS, Pag-IBIG or
PhilHealth is
a.
Due to GSIS/ Pag-IBIG/ PhilHealth
xxx
Cash-Tax Remittance Advice
xxx
b.
Due to GSIS/ Pag-IBIG/ PhilHealth
xxx
Cash-Collecting Officers
xxx
d.
No journal entry.
49. The budget preparation in the Philippines
a. starts with the Budget Call from the BTr.
b. uses a “zero-bottoms-up” approach.
c. ends with the issuance of the “Bicam Version” by the Bicameral Committee.
50. Choose the correct statement.
Type of tax
a. Income tax
b. Value added tax
c. Customs duty
Taxable event
 Purchase or sale of taxable goods or services
 Earning of taxable income
 Undertaking of a taxable activity
51. Entity A acquires equipment from a supplier, on account. A lender settles the account of
Entity A by directly paying the supplier the proceeds of a loan payable that is recorded in
the BTr’s books. This mode of disbursement is called
a. Cash Disbursement Ceiling (CDC)
c. Non-Cash Availment Authority (NCAA)
d. Notice of Transfer of Allocation (NTA)
52. Under this type of disbursement authority, disbursements are made out of the entity’s own
bank account rather than through the Treasury Single Account.
)
b. Disbursement through Cash Disbursement Ceiling (CDC)
c. Disbursement through electronic Modified Disbursement System (eMDS)
d. Disbursement through Non-Cash Availment Authority (NCAA)
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53. The entry to record the receipt of a disbursement authority in the form of Cash
Disbursement Ceiling (CDC) is
b. Accounts Payable
Subsidy from National Government
c. Accounts Payable
Cash-Modified Disbursement System (MDS), Regular
d. Cash-Modified Disbursement System (MDS), Regular
Subsidy from National Government
xxx
xxx
xxx
xxx
xxx
xxx
54. An entity accrues salaries and wages after approval of payroll. The entry is
a.
b.
c.
Salaries and Wages, Regular
Personal Economic Relief Allowance (PERA)
Cash-Modified Disbursement System (MDS),
Regular
Salaries and Wages, Regular
Personal Economic Relief Allowance (PERA)
Advances to Officers and Employees
Salaries and Wages, Regular
Personal Economic Relief Allowance (PERA)
Due to BIR
Due to SSS
Due to Pag-IBIG
Due to PhilHealth
Due to Officers and Employees
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
55. Entity A, a government entity, grants a ₱10,000 cash advance for the travelling expenses of
an employee. The employee liquidates ₱8,000 of the cash advance and remits the excess
cash advance of ₱2,000. After recording the grant of cash advance and the liquidation
thereof but before adjustment for the collection of the excess cash advance, how much is
the recorded expense in the books of accounts?
a. ₱0
b. ₱2,000
c. ₱8,000
56. Entity A, a government entity, receives its Notice of Cash Allocation amounting to
₱5,000,000 for the year. The journal entry to record this event is
b.
c.
Cash-Collecting Officers
Subsidy from National Government
Cash-Tax Remittance Advice
Due to the National Government
0
0
5,000,000
5,000,000
5,000,000
5,000,000
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d.
No journal entry.
57. Entity A, a government entity, receives notice of its ₱10M appropriation for the year. The
journal entry to record this event is
a.
Cash-Modified Disbursement System (MDS), Regular
10,000,000
Subsidy from National Government
10,000,000
b.
Cash-Collecting Officers
10,000,000
Subsidy from National Government
10,000,000
c.
Cash-Tax Remittance Advice
10,000,000
Due to the National Government
10,000,000
58. Entity A, a government entity, receives its ₱9M allotment. The journal entry to record this
event is
a.
Cash-Modified Disbursement System (MDS), Regular
9,000,000
Subsidy from National Government
9,000,000
b.
Cash-Collecting Officers
9,000,000
Subsidy from National Government
9,000,000
c.
Cash-Tax Remittance Advice
9,000,000
Due to the National Government
9,000,000
59. The journal entry to record the collection of unbilled tax revenue (e.g., Travel Tax) through
direct deposit in Authorized Agent Banks is
a.
Accounts Receivable
xxx
Travel Tax
xxx
b.
Cash-Modified Disbursement System (MDS), Regular
Travel Tax
xxx
xxx
d.
Cash-Treasury/Agency Deposit, Regular
Travel Tax
xxx
xxx
60. Which of the following reflects a Non-Cash Availment Authority (NCAA) mode of
disbursement?
xxx
a.
Accounts Payable
Cash-Constructive Income
Remittance
xxx
b.
Accounts Payable
xxx
Cash – Modified Disbursement
System (MDS), Regular
xxx
d.
None of these.
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PREPARED BY:
JASON I. TRINIDAD, CPA
REVIEWED AND APPROVED BY:
ROSARIO CALAMBA, CPA, DBA CANDIDATE
“Go ahead and be lazy; sleep on, but you will go hungry.” (Proverbs 19:15)
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